Visa (V) Stock Closed Up on Possible Acquisition of Visa Europe

NEW YORK (TheStreet) -- Shares of Visa (V) ended Friday's regular trading session up 4.34% to $69.47 on heavy volume, following reports that the company is in talks buy its former subsidiary, according to Bloomberg.

Visa approached Visa Europe with price discussions ranging from $15 billion to $20 billion, Bloomberg reports.

In October of 2007, Visa Europe became an independent company and is a membership association of European members and other payment service providers.

San Francisco-based Visa is a payments technology company engaged in operating a processing network, VisaNet, which facilitates authorization, clearing, and settlement of payment transactions worldwide.

The company provides its services to consumers, businesses, financial institutions, and governments in more than 200 countries and territories for electronic payments.

Shares are down 0.1% to $69.40 in after-hours trading Friday.

About 18.27 million shares have exchanged hands as of 4:30 p.m. ET today, compared to its average trading volume of about 7.82 million shares a day.

Separately, TheStreet Ratings team rates VISA INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate VISA INC (V) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 21.9%. Since the same quarter one year prior, revenues slightly increased by 7.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • V has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, V has a quick ratio of 1.55, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for VISA INC is currently very high, coming in at 70.67%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 45.46% significantly outperformed against the industry average.
  • VISA INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VISA INC increased its bottom line by earning $2.15 versus $1.90 in the prior year. This year, the market expects an improvement in earnings ($2.59 versus $2.15).
  • Compared to its closing price of one year ago, V's share price has jumped by 30.40%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • You can view the full analysis from the report here: V Ratings Report

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